'Risk of fraud, unusual payments': Auditor slams council
A SCATHING report into the financial management of the Ipswich City Council has warned of an increased risk of fraud and revealed unauthorised donations were made to community groups.
The Queensland Audit Office's interim report to the council analysed internal processes, systems and financial reporting issues.
It found six significant deficiencies in the management of the council and its controlled companies.
In its investigation, the Queensland Audit Office found an "increased risk of unauthorised or inappropriate changes being made" to council records.
The office warned the lack of transparency "may result in duplicate payments, payments being made to incorrect bank accounts or fraud".
The office's interim report is based on its audit work performed to February 28 this year.
In another "significant deficiency", the audit office uncovered the unusual payment of four employees through a "deed of release" agreement.
It found the pay incentive provided to each employee differed - with one staffer getting 16 weeks of standard pay on their termination date while another received four weeks.
The audit office noted "there were inconsistent levels of documentation available to us to support the reason for each of these employees' terminations".
"Payments made under a deed of release could result in potential misuse of the current system, may be seen as favouring particular employees, and could expose council to unnecessary reputational risks," the report found.
The audit office found unauthorised payments to community groups.
The council's Community and Citywide Donations Policy stipulates if the maximum amount of any donations for any one applicant any financial year is more than $5000, the allocation will be required to be approved by the CEO in consultations with the mayor and deputy mayor.
No approval was obtained for two payments including $5277 to the Bundamba State Secondary College and $14,000 to the Northern Suburbs Senior Rugby League Football Club. Such actions could increase the risk of inappropriate expenditure, the audit office found.
Two significant issues identified last year by the Queensland Audit Office remain a work in progress.
Guidelines will be developed after the audit office uncovered three instances where an employees' termination payment was not in accordance with their contract, including an ex-gratia payment of $150,000.
Staff were also directed to follow the correct process after it was revealed council officers were engaging legal firms directly for "ad hoc legal matters, rather than following council policy of using the council's legal section".
The council is expected to today refer the Queensland Audit Office report to its Audit and Risk Management Committee for consideration.
'SIGNIFICANT ISSUES' WITH COUNCIL COMPANIES
Ipswich City Properties Pty Ltd
- Robustness of process used to engage developer
- Non compliance with expenditure policy in relation to obtaining quotes
Ipswich Motorsport Park Pty Ltd
- Board minutes not signed
- No budget produced
- Insufficient documentation for awarding of contract for final design of Queensland Raceway
- Directors approved their own expenditure
- Use of former general manager's expenditure blanket approval post their departure
Ipswich City Developments Pty Ltd
- Sale of Redbank Plains retail and residential - not offered for market
- Debit card expenditure not independently approved
WE'RE TAKING IT SERIOUSLY: COUNCIL
THE Ipswich City Council has declared it is "taking seriously" all issues raised in the Queensland Audit Office's interim report.
Significant deficiencies were noted in the office's report to the council's City Management, Finance and Community Engagement committee.
A spokesman for the council said the organisation "actively reviews and implements the recommendations" made by the Queensland Audit Office.
"Ipswich City Council has previously received recognition of its sound financial management, including having one of the lowest rates arrears in Queensland, and possibly Australia," the spokesman said.
The QT questioned the council about its termination payments made to staff, including how they were calculated and when the payments were made.
"All termination payments include legal entitlements owed to an employee," the spokesman said.
"Any additional payment is carefully considered against the need to expedite settlement in a prudent manner.
"In some cases this avoids matters being escalated and being brought before a court."
After a similar report from the Auditor-General was handed down in January, Councillor Wayne Wendt said the council was "moving quickly to address the recommendations raised so as to rule out any ongoing concerns about internal policies and procedures".